Naftali Bennett, leader of the Jewish Home party, gestures as he leaves the Western Wall in Jerusalem's Old City.Reuters

Israel's Economy Minister Naftali Bennett has called on the government to launch a military operation in the country's restive East Jerusalem district in order to "go to the source" of terror in the holy city.

"We need to move from defence to attack, like we did in Operation Defensive shield," Bennett told Israel's Army Radio in an interview.

"Go in with Border Police forces, make arrests, create intelligence channels, stay there on a permanent basis, not just when there's a terror attack," he added, just a day after four Israelis were killed in a deadly attack on a synagogue in West Jerusalem.

"Instead of just placing guards at every cafe and restaurant in Israel,at every synagogue and every kindergarten, we need to go to the source," he stated.

Last week, after an Israeli soldier was killed in a Palestinian stabbing attack in Tel Aviv, Bennett said: "This is a terrible terror attack which proves that the concept of hiding behind barriers is bankrupt."

He also condemned the Israeli police's decision to install concrete barriers at Jerusalem light rail stations after a series of hit-and-run attacks at the stations which have killed a number of civilians.

"It is not possible to barricade people in the streets, but rather we must put those responsible for incitement, fireworks and the rioters in jail. This is correct security policy," he said.

Tensions have continued to rise in the Israeli capital following an attempted assassination of a far-right Jewish activist, a series of Palestinian stabbing attacks against Israelis and protests by Arab-Israelis which led to a 24-hour general strike.

Unrest in the holy city has been exacerbated by developments regarding the Temple Mount, or Al-Aqsa compound, which has witnessed clashes after proposals to enhance Jewish access to the flashpoint site, where they are currently banned from praying.

Recently, Israeli Housing Minister Uri Ariel said that Israel will eventually replace Al-Aqsa Mosque with a Jewish temple, despite the compound being the third-holiest site in Islam.

The leader of the Jewish Home party recently condemned US Secretary of State John Kerry for comments likening the battle against the Islamic State [IS] to the Israeli-Palestinian conflict.

America's top diplomat said that the topic of the conflict always arose when he spoke to leaders about IS' growth in the region "because it was a cause of recruitment and of street anger and agitation".

Bennett responded by saying that linking the conflict to the recruitment of more jihadists to the terror group was only encouraging more terror.